State on target for billion dollar surplus

ALBANY — New York will enter its next fiscal year with a surplus of roughly $1 billion, state officials projected in an updated financial plan released Thursday.

Most of that money, $650 million, is the result of settlements reached by the Department of Financial Services with several major firms. They include Credit Agricole, which is paying the state $385 million for violating U.S. sanctions and Deutsche Bank, which will fork over $200 million for the same reason.

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Additionally, higher-than-expected income taxes and “six atypically large estate tax payments” this year have led to a $350 million operating surplus. Most of this cash, $250 million, will be disbursed this year so New Yorkers can get early income tax refunds, but will create wiggle room in the 2016-17 spending plan that Gov. Andrew Cuomo will release at the end of January.

The $650 million in bank settlements will go into an undesignated reserve, which as of March is projected to contain $2.1 billion. The Democratic governor has not announced plans to use that money, but some of it will likely be directed to unfunded capital projects.

By law, the state's financial plan must be released by the end of October. It was posted online Thursday.

The document also shows the state will not resort to borrowing next year to cover what officials say was an unplanned increase in pension costs. Earlier this year, officials had planned to borrow $1 billion over the next five years.

Also Thursday, Comptroller Tom DiNapoli released an estimate of what he believes next year's tax revenues will be. DiNapoli's report — which will be reconciled with estimates by the Legislature as well as Cuomo's Division of the Budget before the governor reveals his executive budget — projects that state tax receipts will grow by 3.2 percent in the 2016-17 fiscal year.